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OECD Guidelines for Multinational Enterprises

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OECD Guidelines for Multinational Enterprises The OECD Guidelines for Multinational Enterprises are the most comprehensive instrument in existence today for corporate responsibility multilaterally agreed by governments. Adhering governments - representing all regions of the world and accounting for 85 per cent of foreign direct investment – are committed to encouraging enterprises operating in their territory to observe a set of widely recognised principles and standards for responsible business conduct wherever they operate. This booklet contains the text, implementation procedures and commentary adopted in June 2000, on the occasion of the most recent revision of the Guidelines.

Detailed information about adhering governments and actions taken to implement the Guidelines is available on the OECD website at www.oecd.org/daf/investment/guidelines

OECD Guidelines for Multinational

Enterprises

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The OECD is a unique forum where the governments of 30 democracies worktogether to address the economic, social and environmental challenges of globalisation.The OECD is also at the forefront of efforts to understand and to help governmentsrespond to new developments and concerns, such as corporate governance, theinformation economy and the challenges of an ageing population. The Organisationprovides a setting where governments can compare policy experiences, seek answers tocommon problems, identify good practice and work to co-ordinate domestic andinternational policies.

The OECD member countries are: Australia, Austria, Belgium, Canada, theCzech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand,Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey,the United Kingdom and the United States. The Commission of the EuropeanCommunities takes part in the work of the OECD.

OECD Publishing disseminates widely the results of the Organisation’s statisticsgathering and research on economic, social and environmental issues, as well as theconventions, guidelines and standards agreed by its members.

Also available in French under the title:

Les Principes directeurs de l’OCDE à l’intention des entreprises multinationales

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TABLE OF CONTENTS

Table of Contents

Declaration on International Investment and Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Part I. OECD Guidelines for Multinational Enterprises . . . . . . . . . . . . . . . 7

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9I. Concepts and Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

II. General Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14III. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15IV. Employment and Industrial Relations . . . . . . . . . . . . . . . . . . . . . . 17V. Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

VI. Combating Bribery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21VII. Consumer Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VIII. Science and Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23IX. Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24X. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Part II. Implementation Procedures of the OECD Guidelines for Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Decision of the OECD Council on the OECD Guidelines for Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Procedural Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Part III. Commentaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Commentary on the OECD Guidelines for Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Commentary on the Implementation Procedures of the OECD Guidelines for Multinational Enterprises . . . . . . . . 55

OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES – © OECD 2008 3

DECLARATION ON INTERNATIONAL INVESTMENT AND MULTINATIONAL ENTERPRISES

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Declaration on International Investmentand Multinational Enterprises

27 June 2000ADHERING GOVERNMENTS1

CONSIDERING:

– That international investment is of major importance to the worldeconomy, and has considerably contributed to the development of theircountries;

– That multinational enterprises play an important role in this investmentprocess;

– That international co-operation can improve the foreign investmentclimate, encourage the positive contribution which multinationalenterprises can make to economic, social and environmental progress, andminimise and resolve difficulties which may arise from their operations;

– That the benefits of international co-operation are enhanced by addressingissues relating to international investment and multinational enterprisesthrough a balanced framework of inter-related instruments;

DECLARE:

Guidelines for Multinational Enterprises

I. That they jointly recommend to multinational enterpriseoperating in or from their territories the observance of theGuidelines, set forth in Annex 1 hereto,2 having regard to theconsiderations and understandings that are set out in thePreface and are an integral part of them;

National Treatment II.1. That adhering governments should, consistent with theineeds to maintain public order, to protect their essentiasecurity interests and to fulfil commitments relating tointernational peace and security, accord to enterprises operating in their territories and owned or controlled directly oindirectly by nationals of another adhering governmen(hereinafter referred to as “Foreign-Controlled Enterprises”treatment under their laws, regulations and administrativepractices, consistent with international law and no lesfavourable than that accorded in like situations to domesticenterprises (hereinafter referred to as “National Treatment”)


DECLARATION ON INTERNATIONAL INVESTMENT AND MULTINATIONAL ENTERPRISES

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Notes

1. As at 27 June 2000 adhering governments are those of all OECD Members, as wellas Argentina, Brazil, Chile and the Slovak Republic. The European Community hasbeen invited to associate itself with the section on National Treatment on mattersfalling within its competence.

2. The text of the Guidelines for Multinational Enterprises is reproduced in Part I of thisBooklet.

3. The text of General considerations and Practical Approaches concerningConflicting Requirements Imposed on Multinational Enterprises is available fromthe OECD Website www.oecd.org/daf/investment/guidelines/conflict.htm.

2. That adhering governments will consider applying“National Treatment” in respect of countries other thanadhering governments;

3. That adhering governments will endeavour to ensure thatheir territorial subdivisions apply “National Treatment”;

4. That this Declaration does not deal with the right of adhering governments to regulate the entry of foreign investmenor the conditions of establishment of foreign enterprises;

Conflicting Requirements

III. That they will co-operate with a view to avoiding or minimising the imposition of conflicting requirements on multinational enterprises and that they will take into account thegeneral considerations and practical approaches.3

International Investment Incentives and Disincentives

IV.1 That they recognise the need to strengthen their co-operation in the field of international direct investment;

2. That they thus recognise the need to give due weight to theinterests of adhering governments affected by specific lawsregulations and administrative practices in this field (hereinafter called “measures”) providing official incentives anddisincentives to international direct investment;

3. That adhering governments will endeavour to make suchmeasures as transparent as possible, so that their importance and purpose can be ascertained and that informationon them can be readily available;

Consultation Procedures

V. That they are prepared to consult one another on the abovematters in conformity with the relevant Decisions of theCouncil;

Review VI. That they will review the above matters periodically with aview to improving the effectiveness of international economic co-operation among adhering governments on issuerelating to international investment and multinationaenterprises.

OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES – © OECD 20086

http://www.oecd.org/daf/investment/guidelines/conflict.htm

PART I




© OECD 2008

Preface

1. The OECD Guidelines for Multinational Enterprises (the Guidelines) arerecommendations addressed by governments to multinational enterprises.They provide voluntary principles and standards for responsible businessconduct consistent with applicable laws. The Guidelines aim to ensure that theoperations of these enterprises are in harmony with government policies, tostrengthen the basis of mutual confidence between enterprises and thesocieties in which they operate, to help improve the foreign investmentclimate and to enhance the contribution to sustainable development made bymultinational enterprises. The Guidelines are part of the OECD Declaration onInternational Investment and Multinational Enterprises the other elements ofwhich relate to national treatment, conflicting requirements on enterprises,and international investment incentives and disincentives.

2. International business has experienced far-reaching structural changeand the Guidelines themselves have evolved to reflect these changes. With therise of service and knowledge-intensive industries, service and technologyenterprises have entered the international marketplace. Large enterprises stillaccount for a major share of international investment, and there is a trendtoward large-scale international mergers. At the same time, foreigninvestment by small- and medium-sized enterprises has also increased andthese enterprises now play a significant role on the international scene.Multinational enterprises, like their domestic counterparts, have evolved toencompass a broader range of business arrangements and organisationalforms. Strategic alliances and closer relations with suppliers and contractorstend to blur the boundaries of the enterprise.

3. The rapid evolution in the structure of multinational enterprises is alsoreflected in their operations in the developing world, where foreign directinvestment has grown rapidly. In developing countries, multinational enterpriseshave diversified beyond primary production and extractive industries intomanufacturing, assembly, domestic market development and services.

4. The activities of multinational enterprises, through international tradeand investment, have strengthened and deepened the ties that join OECDeconomies to each other and to the rest of the world. These activities bringsubstantial benefits to home and host countries. These benefits accrue whenmultinational enterprises supply the products and services that consumers

9

I. OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

want to buy at competitive prices and when they provide fair returns tosuppliers of capital. Their trade and investment activities contribute to theefficient use of capital, technology and human and natural resources. Theyfacilitate the transfer of technology among the regions of the world and thedevelopment of technologies that reflect local conditions. Through bothformal training and on-the-job learning enterprises also promote thedevelopment of human capital in host countries.

5. The nature, scope and speed of economic changes have presented newstrategic challenges for enterprises and their stakeholders. Multinationalenterprises have the opportunity to implement best practice policies forsustainable development that seek to ensure coherence between social,economic and environmental objectives. The ability of multinationalenterprises to promote sustainable development is greatly enhanced whentrade and investment are conducted in a context of open, competitive andappropriately regulated markets.

6. Many multinational enterprises have demonstrated that respect for highstandards of business conduct can enhance growth. Today’s competitiveforces are intense and multinational enterprises face a variety of legal, socialand regulatory settings. In this context, some enterprises may be tempted toneglect appropriate standards and principles of conduct in an attempt to gainundue competitive advantage. Such practices by the few may call intoquestion the reputation of the many and may give rise to public concerns.

7. Many enterprises have responded to these public concerns by developinginternal programmes, guidance and management systems that underpin theircommitment to good corporate citizenship, good practices and good businessand employee conduct. Some of them have called upon consulting, auditingand certification services, contributing to the accumulation of expertise in theseareas. These efforts have also promoted social dialogue on what constitutesgood business conduct. The Guidelines clarify the shared expectations forbusiness conduct of the governments adhering to them and provide a point ofreference for enterprises. Thus, the Guidelines both complement and reinforceprivate efforts to define and implement responsible business conduct.

8. Governments are co-operating with each other and with other actors tostrengthen the international legal and policy framework in which business isconducted. The post-war period has seen the development of this framework,starting with the adoption in 1948 of the Universal Declaration of Human Rights.Recent instruments include the ILO Declaration on Fundamental Principles andRights at Work, the Rio Declaration on Environment and Development andAgenda 21 and the Copenhagen Declaration for Social Development.



9. The OECD has also been contributing to the international policyframework. Recent developments include the adoption of the Convention onCombating Bribery of Foreign Public Officials in International BusinessTransactions and of the OECD Principles of Corporate Governance, the OECDGuidelines for Consumer Protection in the Context of Electronic Commerce, andongoing work on the OECD Guidelines on Transfer Pricing for MultinationalEnterprises and Tax Administrations.

10. The common aim of the governments adhering to the Guidelines is toencourage the positive contributions that multinational enterprises can maketo economic, environmental and social progress and to minimise the difficultiesto which their various operations may give rise. In working towards this goal,governments find themselves in partnership with the many businesses, tradeunions and other non-governmental organisations that are working in theirown ways toward the same end. Governments can help by providing effectivedomestic policy frameworks that include stable macroeconomic policy,non-discriminatory treatment of firms, appropriate regulation and prudentialsupervision, an impartial system of courts and law enforcement and efficientand honest public administration. Governments can also help by maintainingand promoting appropriate standards and policies in support of sustainabledevelopment and by engaging in ongoing reforms to ensure that public sectoractivity is efficient and effective. Governments adhering to the Guidelines arecommitted to continual improvement of both domestic and internationalpolicies with a view to improving the welfare and living standards of all people.



I. Concepts and Principles

1. The Guidelines are recommendations jointly addressed by governments tomultinational enterprises. They provide principles and standards of goodpractice consistent with applicable laws. Observance of the Guidelines byenterprises is voluntary and not legally enforceable.

2. Since the operations of multinational enterprises extend throughout theworld, international co-operation in this field should extend to all countries.Governments adhering to the Guidelines encourage the enterprises operatingon their territories to observe the Guidelines wherever they operate, whiletaking into account the particular circumstances of each host country.

3. A precise definition of multinational enterprises is not required for thepurposes of the Guidelines. These usually comprise companies or other entitiesestablished in more than one country and so linked that they may co-ordinatetheir operations in various ways. While one or more of these entities may beable to exercise a significant influence over the activities of others, their degreeof autonomy within the enterprise may vary widely from one multinationalenterprise to another. Ownership may be private, state or mixed. The Guidelines

are addressed to all the entities within the multinational enterprise (parentcompanies and/or local entities). According to the actual distribution ofresponsibilities among them, the different entities are expected to co-operateand to assist one another to facilitate observance of the Guidelines.

4. The Guidelines are not aimed at introducing differences of treatmentbetween multinational and domestic enterprises; they reflect good practicefor all. Accordingly, multinational and domestic enterprises are subject to thesame expectations in respect of their conduct wherever the Guidelines arerelevant to both.

5. Governments wish to encourage the widest possible observance of theGuidelines. While it is acknowledged that small- and medium-sized enterprisesmay not have the same capacities as larger enterprises, governments adheringto the Guidelines nevertheless encourage them to observe the Guidelinesrecommendations to the fullest extent possible.

6. Governments adhering to the Guidelines should not use them forprotectionist purposes nor use them in a way that calls into question thecomparative advantage of any country where multinational enterprises invest.



7. Governments have the right to prescribe the conditions under whichmultinational enterprises operate within their jurisdictions, subject tointernational law. The entities of a multinational enterprise located in variouscountries are subject to the laws applicable in these countries. Whenmultinational enterprises are subject to conflicting requirements by adheringcountries, the governments concerned will co-operate in good faith with aview to resolving problems that may arise.

8. Governments adhering to the Guidelines set them forth with theunderstanding that they will fulfil their responsibilities to treat enterprisesequitably and in accordance with international law and with their contractualobligations.

9. The use of appropriate international dispute settlement mechanisms,including arbitration, is encouraged as a means of facilitating the resolution oflegal problems arising between enterprises and host country governments.

10. Governments adhering to the Guidelines will promote them and encouragetheir use. They will establish National Contact Points that promote theGuidelines and act as a forum for discussion of all matters relating to theGuidelines. The adhering Governments will also participate in appropriatereview and consultation procedures to address issues concerning interpretationof the Guidelines in a changing world.



II. General Policies

Enterprises should take fully into account established policies in thecountries in which they operate, and consider the views of other stakeholders.In this regard, enterprises should:

1. Contribute to economic, social and environmental progress with a view toachieving sustainable development.

2. Respect the human rights of those affected by their activities consistentwith the host government’s international obligations and commitments.

3. Encourage local capacity building through close co-operation with thelocal community, including business interests, as well as developing theenterprise’s activities in domestic and foreign markets, consistent withthe need for sound commercial practice.

4. Encourage human capital formation, in particular by creating employmentopportunities and facilitating training opportunities for employees.

5. Refrain from seeking or accepting exemptions not contemplated in thestatutory or regulatory framework related to environmental, health,safety, labour, taxation, financial incentives, or other issues.

6. Support and uphold good corporate governance principles and developand apply good corporate governance practices.

7. Develop and apply effective self-regulatory practices and managementsystems that foster a relationship of confidence and mutual trust betweenenterprises and the societies in which they operate.

8. Promote employee awareness of, and compliance with, company policiesthrough appropriate dissemination of these policies, including throughtraining programmes.

9. Refrain from discriminatory or disciplinary action against employees whomake bona fide reports to management or, as appropriate, to the competentpublic authorities, on practices that contravene the law, the Guidelines or theenterprise’s policies.

10. Encourage, where practicable, business partners, including suppliers andsub-contractors, to apply principles of corporate conduct compatible withthe Guidelines.

11. Abstain from any improper involvement in local political activities.



III. Disclosure

1. Enterprises should ensure that timely, regular, reliable and relevantinformation is disclosed regarding their activities, structure, financialsituation and performance. This information should be disclosed for theenterprise as a whole and, where appropriate, along business lines orgeographic areas. Disclosure policies of enterprises should be tailored to thenature, size and location of the enterprise, with due regard taken of costs,business confidentiality and other competitive concerns.

2. Enterprises should apply high quality standards for disclosure, accounting,and audit. Enterprises are also encouraged to apply high quality standards fornon-financial information including environmental and social reporting wherethey exist. The standards or policies under which both financial andnon-financial information are compiled and published should be reported.

3. Enterprises should disclose basic information showing their name,location, and structure, the name, address and telephone number of theparent enterprise and its main affiliates, its percentage ownership, direct andindirect in these affiliates, including shareholdings between them.

4. Enterprises should also disclose material information on:

a) The financial and operating results of the company.

b) Company objectives.

c) Major share ownership and voting rights.

d) Members of the board and key executives, and their remuneration.

e) Material foreseeable risk factors.

f) Material issues regarding employees and other stakeholders.

g) Governance structures and policies.

5. Enterprises are encouraged to communicate additional information thatcould include:

a) Value statements or statements of business conduct intended for publicdisclosure including information on the social, ethical and environmentalpolicies of the enterprise and other codes of conduct to which the companysubscribes. In addition, the date of adoption, the countries and entities towhich such statements apply and its performance in relation to thesestatements may be communicated.



b) Information on systems for managing risks and complying with laws, andon statements or codes of business conduct.

c) Information on relationships with employees and other stakeholders.



IV. Employment and Industrial Relations

Enterprises should, within the framework of applicable law, regulationsand prevailing labour relations and employment practices:

1. a) Respect the right of their employees to be represented by trade unions andother bona fide representatives of employees, and engage in constructivenegotiations, either individually or through employers’ associations, withsuch representatives with a view to reaching agreements on employmentconditions.

b) Contribute to the effective abolition of child labour.

c) Contribute to the elimination of all forms of forced or compulsory labour.

d) Not discriminate against their employees with respect to employment oroccupation on such grounds as race, colour, sex, religion, political opinion,national extraction or social origin, unless selectivity concerningemployee characteristics furthers established governmental policieswhich specifically promote greater equality of employment opportunity orrelates to the inherent requirements of a job.

2. a) Provide facilities to employee representatives as may be necessary toassist in the development of effective collective agreements.

b) Provide information to employee representatives which is needed formeaningful negotiations on conditions of employment.

c) Promote consultation and co-operation between employers and employeesand their representatives on matters of mutual concern.

3. Provide information to employees and their representatives which enablesthem to obtain a true and fair view of the performance of the entity or,where appropriate, the enterprise as a whole.

4. a) Observe standards of employment and industrial relations not lessfavourable than those observed by comparable employers in the hostcountry.

b) Take adequate steps to ensure occupational health and safety in theiroperations.



5. In their operations, to the greatest extent practicable, employ localpersonnel and provide training with a view to improving skill levels, inco-operation with employee representatives and, where appropriate,relevant governmental authorities.

6. In considering changes in their operations which would have major effectsupon the livelihood of their employees, in particular in the case of the closureof an entity involving collective lay-offs or dismissals, provide reasonablenotice of such changes to representatives of their employees, and, whereappropriate, to the relevant governmental authorities, and co-operate withthe employee representatives and appropriate governmental authorities soas to mitigate to the maximum extent practicable adverse effects. In light ofthe specific circumstances of each case, it would be appropriate ifmanagement were able to give such notice prior to the final decision beingtaken. Other means may also be employed to provide meaningful co-operation to mitigate the effects of such decisions.

7. In the context of bona fide negotiations with representatives of employeeson conditions of employment, or while employees are exercising a right toorganise, not threaten to transfer the whole or part of an operating unitfrom the country concerned nor transfer employees from the enterprises’component entities in other countries in order to influence unfairly thosenegotiations or to hinder the exercise of a right to organise.

8. Enable authorised representatives of their employees to negotiate oncollective bargaining or labour-management relations issues and allow theparties to consult on matters of mutual concern with representatives ofmanagement who are authorised to take decisions on these matters.



V. Environment

Enterprises should, within the framework of laws, regulations andadministrative practices in the countries in which they operate, and inconsideration of relevant international agreements, principles, objectives, andstandards, take due account of the need to protect the environment, publichealth and safety, and generally to conduct their activities in a mannercontributing to the wider goal of sustainable development. In particular,enterprises should:

1. Establish and maintain a system of environmental managementappropriate to the enterprise, including:

a) collection and evaluation of adequate and timely information regardingthe environmental, health, and safety impacts of their activities;

b) establishment of measurable objectives and, where appropriate, targetsfor improved environmental performance, including periodicallyreviewing the continuing relevance of these objectives; and

c) regular monitoring and verification of progress toward environmental,health, and safety objectives or targets.

2. Taking into account concerns about cost, business confidentiality, and theprotection of intellectual property rights:

a) provide the public and employees with adequate and timely informationon the potential environment, health and safety impacts of the activitiesof the enterprise, which could include reporting on progress inimproving environmental performance; and

b) engage in adequate and timely communication and consultation withthe communities directly affected by the environmental, health andsafety policies of the enterprise and by their implementation.

3. Assess, and address in decision-making, the foreseeable environmental,health, and safety-related impacts associated with the processes, goodsand services of the enterprise over their full life cycle. Where theseproposed activities may have significant environmental, health, or safetyimpacts, and where they are subject to a decision of a competent authority,prepare an appropriate environmental impact assessment.



4. Consistent with the scientific and technical understanding of the risks,where there are threats of serious damage to the environment, taking alsointo account human health and safety, not use the lack of full scientificcertainty as a reason for postponing cost-effective measures to prevent orminimise such damage.

5. Maintain contingency plans for preventing, mitigating, and controllingserious environmental and health damage from their operations, includingaccidents and emergencies; and mechanisms for immediate reporting tothe competent authorities.

6. Continually seek to improve corporate environmental performance, byencouraging, where appropriate, such activities as:

a) adoption of technologies and operating procedures in all parts of theenterprise that reflect standards concerning environmental performancein the best performing part of the enterprise;

b) development and provision of products or services that have no undueenvironmental impacts; are safe in their intended use; are efficient intheir consumption of energy and natural resources; can be reused,recycled, or disposed of safely;

c) promoting higher levels of awareness among customers of theenvironmental implications of using the products and services of theenterprise; and

d) research on ways of improving the environmental performance of theenterprise over the longer term.

7. Provide adequate education and training to employees in environmentalhealth and safety matters, including the handling of hazardous materialsand the prevention of environmental accidents, as well as more generalenvironmental management areas, such as environmental impactassessment procedures, public relations, and environmental technologies.

8. Contribute to the development of environmentally meaningful andeconomically efficient public policy, for example, by means of partnershipsor initiatives that will enhance environmental awareness and protection.



VI. Combating Bribery

Enterprises should not, directly or indirectly, offer, promise, give, ordemand a bribe or other undue advantage to obtain or retain business or otherimproper advantage. Nor should enterprises be solicited or expected to rendera bribe or other undue advantage. In particular, enterprises should:

1. Not offer, nor give in to demands, to pay public officials or the employees ofbusiness partners any portion of a contract payment. They should not usesubcontracts, purchase orders or consulting agreements as means ofchannelling payments to public officials, to employees of business partnersor to their relatives or business associates.

2. Ensure that remuneration of agents is appropriate and for legitimateservices only. Where relevant, a list of agents employed in connection withtransactions with public bodies and state-owned enterprises should be keptand made available to competent authorities.

3. Enhance the transparency of their activities in the fight against bribery andextortion. Measures could include making public commitments againstbribery and extortion and disclosing the management systems the companyhas adopted in order to honour these commitments. The enterprise shouldalso foster openness and dialogue with the public so as to promote itsawareness of and co-operation with the fight against bribery and extortion.

4. Promote employee awareness of and compliance with company policiesagainst bribery and extortion through appropriate dissemination of thesepolicies and through training programmes and disciplinary procedures.

5. Adopt management control systems that discourage bribery and corruptpractices, and adopt financial and tax accounting and auditing practicesthat prevent the establishment of “off the books” or secret accounts or thecreation of documents which do not properly and fairly record thetransactions to which they relate.

6. Not make illegal contributions to candidates for public office or to politicalparties or to other political organisations. Contributions should fullycomply with public disclosure requirements and should be reported tosenior management.



VII. Consumer Interests

When dealing with consumers, enterprises should act in accordance withfair business, marketing and advertising practices and should take all reasonablesteps to ensure the safety and quality of the goods or services they provide. Inparticular, they should:

1. Ensure that the goods or services they provide meet all agreed or legallyrequired standards for consumer health and safety, including healthwarnings and product safety and information labels.

2. As appropriate to the goods or services, provide accurate and clearinformation regarding their content, safe use, maintenance, storage, anddisposal sufficient to enable consumers to make informed decisions.

3. Provide transparent and effective procedures that address consumercomplaints and contribute to fair and timely resolution of consumerdisputes without undue cost or burden.

4. Not make representations or omissions, nor engage in any other practices,that are deceptive, misleading, fraudulent, or unfair.

5. Respect consumer privacy and provide protection for personal data.

6. Co-operate fully and in a transparent manner with public authorities in theprevention or removal of serious threats to public health and safety derivingfrom the consumption or use of their products.



VIII. Science and Technology

Enterprises should:

1. Endeavour to ensure that their activities are compatible with the scienceand technology (S&T) policies and plans of the countries in which theyoperate and as appropriate contribute to the development of local andnational innovative capacity.

2. Adopt, where practicable in the course of their business activities, practicesthat permit the transfer and rapid diffusion of technologies and know-how,with due regard to the protection of intellectual property rights.

3. When appropriate, perform science and technology development work inhost countries to address local market needs, as well as employ host countrypersonnel in an S&T capacity and encourage their training, taking intoaccount commercial needs.

4. When granting licenses for the use of intellectual property rights or whenotherwise transferring technology, do so on reasonable terms and conditionsand in a manner that contributes to the long term development prospects ofthe host country.

5. Where relevant to commercial objectives, develop ties with localuniversities, public research institutions, and participate in co-operativeresearch projects with local industry or industry associations.



IX. Competition

Enterprises should, within the framework of applicable laws andregulations, conduct their activities in a competitive manner. In particular,enterprises should:

1. Refrain from entering into or carrying out anti-competitive agreementsamong competitors:

a) to fix prices;

b) to make rigged bids (collusive tenders);

c) to establish output restrictions or quotas; or

d) to share or divide markets by allocating customers, suppliers, territoriesor lines of commerce.

2. Conduct all of their activities in a manner consistent with all applicablecompetition laws, taking into account the applicability of the competitionlaws of jurisdictions whose economies would be likely to be harmed byanti-competitive activity on their part.

3. Co-operate with the competition authorities of such jurisdictions by, amongother things and subject to applicable law and appropriate safeguards,providing as prompt and complete responses as practicable to requests forinformation.

4. Promote employee awareness of the importance of compliance with allapplicable competition laws and policies.



X. Taxation

It is important that enterprises contribute to the public finances of hostcountries by making timely payment of their tax liabilities. In particular,enterprises should comply with the tax laws and regulations in all countries inwhich they operate and should exert every effort to act in accordance withboth the letter and spirit of those laws and regulations. This would includesuch measures as providing to the relevant authorities the informationnecessary for the correct determination of taxes to be assessed in connectionwith their operations and conforming transfer pricing practices to the arm’slength principle.


PART II

Implementation Procedures of the OECD Guidelines

for Multinational Enterprises



© OECD 2008

Decision of the OECD Council on the OECD Guidelines

for Multinational EnterprisesJune 2000

THE COUNCIL,

Having regard to the Convention on the Organisation for EconomicCo-operation and Development of 14th December 1960;

Having regard to the OECD Declaration on International Investment andMultinational Enterprises (the “Declaration”), in which the Governments ofadhering countries (“adhering countries”) jointly recommend to multinationalenterprises operating in or from their territories the observance of Guidelinesfor Multinational Enterprises (the “Guidelines”);

Recognising that, since operations of multinational enterprises extendthroughout the world, international co-operation on issues relating to theDeclaration should extend to all countries;

Having regard to the Terms of Reference of the Investment Committee, inparticular with respect to its responsibilities for the Declaration [C(84)171(Final),renewed in C/M(95)21];

Considering the Report on the First Review of the 1976 Declaration[C(79)102(Final)], the Report on the Second Review of the Declaration[C/MIN(84)5(Final)], the Report on the 1991 Review of the Declaration[DAFFE/IME(91)23], and the Report on the 2000 Review of the Guidelines[C(2000)96];

Having regard to the Second Revised Decision of the Council of June 1984[C(84)90], amended June 1991 [C/MIN(91)7/ANN1];

Considering it desirable to enhance procedures by which consultationsmay take place on matters covered by these Guidelines and to promote theeffectiveness of the Guidelines;

On the proposal of the Investment Committee:

DECIDES:

To repeal the Second Revised Decision of the Council of June 1984 [C(84)90],amended June 1991 [C/MIN(91)7/ANN1], and replace it with the following:

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II. IMPLEMENTATION PROCEDURES OF THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

I. National Contact Points

1. Adhering countries shall set up National Contact Points for undertakingpromotional activities, handling inquiries and for discussions with theparties concerned on all matters covered by the Guidelines so that they cancontribute to the solution of problems which may arise in this connection,taking due account of the attached procedural guidance. The businesscommunity, employee organisations, and other interested parties shall beinformed of the availability of such facilities.

2. National Contact Points in different countries shall co-operate if such needarises, on any matter related to the Guidelines relevant to their activities. Asa general procedure, discussions at the national level should be initiatedbefore contacts with other National Contact Points are undertaken.

3. National Contact Points shall meet annually to share experiences andreport to the Investment Committee.

II. The Investment Committee

1. The Investment Committee (“the Committee”) shall periodically or at therequest of an adhering country hold exchanges of views on matters coveredby the Guidelines and the experience gained in their application.

2. The Committee shall periodically invite the Business and Industry AdvisoryCommittee to the OECD (BIAC), and the Trade Union Advisory Committee tothe OECD (TUAC) (the “advisory bodies”), as well as other non-governmentalorganisations to express their views on matters covered by the Guidelines.In addition, exchanges of views with the advisory bodies on these mattersmay be held at their!request.

3. The Committee may decide to hold exchanges of views on matters coveredby the Guidelines with representatives of non-adhering countries.

4. The Committee shall be responsible for clarification of the Guidelines.Clarification will be provided as required. If it so wishes, an individualenterprise will be given the opportunity to express its views either orally orin writing on issues concerning the Guidelines involving its interests. TheCommittee shall not reach conclusions on the conduct of individualenterprises.

5. The Committee shall hold exchanges of views on the activities of NationalContact Points with a view to enhancing the effectiveness of the Guidelines.

6. In fulfilling its responsibilities for the effective functioning of theGuidelines, the Committee shall take due account of the attachedprocedural guidance.



7. The Committee shall periodically report to the Council on matters coveredby the Guidelines. In its reports, the Committee shall take account ofreports by National Contact Points, the views expressed by the advisorybodies, and the views of other non-governmental organisations andnon-adhering countries as appropriate.

III. Review of the Decision

This Decision shall be periodically reviewed. The Committee shall makeproposals for this purpose.



© OECD 2008

Procedural Guidance

I. National Contact Points

The role of National Contact Points (NCP) is to further the effectiveness ofthe Guidelines. NCPs will operate in accordance with core criteria of visibility,accessibility, transparency and accountability to further the objective offunctional equivalence.

A. Institutional arrangements

Consistent with the objective of functional equivalence, adheringcountries have flexibility in organising their NCPs, seeking the active support ofsocial partners, including the business community, employee organisations,and other interested parties, which includes non-governmental organisations.

Accordingly, the National Contact Point:

1. May be a senior government official or a government office headed by asenior official. Alternatively, the National Contact Point may be organisedas a co-operative body, including representatives of other governmentagencies. Representatives of the business community, employeeorganisations and other interested parties may also be included.

2. Will develop and maintain relations with representatives of the businesscommunity, employee organisations and other interested parties that areable to contribute to the effective functioning of the Guidelines.

B. Information and promotion

National Contact Points will:

1. Make the Guidelines known and available by appropriate means, includingthrough on-line information, and in national languages. Prospectiveinvestors (inward and outward) should be informed about the Guidelines, asappropriate.

2. Raise awareness of the Guidelines, including through co-operation, asappropriate, with the business community, employee organisations, othernon-governmental organisations, and the interested public.

3. Respond to enquiries about the Guidelines from:

a) Other National Contact Points;

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b) the business community, employee organisations, other non-governmental organisations and the public; and

c) governments of non-adhering countries.

C. Implementation in specific instances

The NCP will contribute to the resolution of issues that arise relating toimplementation of the Guidelines in specific instances. The NCP will offer aforum for discussion and assist the business community, employeeorganisations and other parties concerned to deal with the issues raised in anefficient and timely manner and in accordance with applicable law. Inproviding this assistance, the NCP will:

1. Make an initial assessment of whether the issues raised merit furtherexamination and respond to the party or parties raising them.

2. Where the issues raised merit further examination, offer good offices tohelp the parties involved to resolve the issues. For this purpose, the NCP willconsult with these parties and where relevant:

a) Seek advice from relevant authorities, and/or representatives of thebusiness community, employee organisations, other non-governmentalorganisations, and relevant experts.

b) Consult the National Contact Point in the other country or countriesconcerned.

c) Seek the guidance of the Investment Committee if it has doubt about theinterpretation of the Guidelines in particular circumstances.

d) Offer, and with the agreement of the parties involved, facilitate access toconsensual and non-adversarial means, such as conciliation ormediation, to assist in dealing with the issues.

3. If the parties involved do not reach agreement on the issues raised, issuea statement, and make recommendations as appropriate, on theimplementation of the Guidelines.

4. a) In order to facilitate resolution of the issues raised, take appropriate stepsto protect sensitive business and other information. While the proceduresunder paragraph 2 are underway, confidentiality of the proceedings will bemaintained. At the conclusion of the procedures, if the parties involvedhave not agreed on a resolution of the issues raised, they are free tocommunicate about and discuss these issues. However, information andviews provided during the proceedings by another party involved willremain confidential, unless that other party agrees to their disclosure.

b) After consultation with the parties involved, make publicly available theresults of these procedures unless preserving confidentiality would be inthe best interests of effective implementation of the Guidelines.



5. If issues arise in non-adhering countries, take steps to develop anunderstanding of the issues involved, and follow these procedures whererelevant and practicable.

D. Reporting

1. Each National Contact Point will report annually to the Committee.

2. Reports should contain information on the nature and results of theactivities of the National Contact Point, including implementation activitiesin specific instances.

II. Investment Committee

1. The Committee will discharge its responsibilities in an efficient and timelymanner.

2. The Committee will consider requests from NCPs for assistance in carryingout their activities, including in the event of doubt about the interpretationof the Guidelines in particular circumstances.

3. The Committee will:

a) Consider the reports of NCPs.

b) Consider a substantiated submission by an adhering country or anadvisory body on whether an NCP is fulfilling its responsibilities withregard to its handling of specific instances.

c) Consider issuing a clarification where an adhering country or anadvisory body makes a substantiated submission on whether an NCP hascorrectly interpreted the Guidelines in specific instances.

d) Make recommendations, as necessary, to improve the functioning ofNCPs and the effective implementation of the Guidelines.

4. The Committee may seek and consider advice from experts on any matterscovered by the Guidelines. For this purpose, the Committee will decide onsuitable procedures.


PART III

Commentaries

Note by the Secretariat: These commentaries have beenprepared by the Investment Committee to provide information onand explanation of the Guidelines text and of the Council Decisionon Implementation of the Guidelines. They are not part of theDeclaration on International Investment and MultinationalEnterprises or of the Council Decision on the Guidelines forMultinational Enterprises.



© OECD 2008

Commentary on the OECD Guidelines for Multinational Enterprises

Commentary on General Policies

1. The General Policies chapter of the Guidelines is the first to containspecific recommendations to enterprises. As such it is important for settingthe tone and establishing common fundamental principles for the specificrecommendations in subsequent chapters.

2. Obeying domestic law is the first obligation of business. The Guidelines arenot a substitute for nor should they be considered to override local law andregulation. They represent supplementary principles and standards ofbehaviour of a non-legal character, particularly concerning the internationaloperations of these enterprises. While the Guidelines extend beyond the law inmany cases, they should not and are not intended to place an enterprise in asituation where it faces conflicting requirements.

3. Enterprises are encouraged to co-operate with governments in thedevelopment and implementation of policies and laws. Considering the viewsof other stakeholders in society, which includes the local community as wellas business interests, can enrich this process. It is also recognised thatgovernments should be transparent in their dealings with enterprises, andconsult with business on these same issues. Enterprises should be viewed aspartners with government in the development and use of both voluntary andregulatory approaches (of which the Guidelines are one element) to policiesaffecting them.

4. There should not be any contradiction between the activity ofmultinational enterprises (MNEs) and sustainable development, and theGuidelines are meant to foster complementarities in this regard. Indeed, linksamong economic, social, and environmental progress are a key means forfurthering the goal of sustainable development.1 On a related issue, whilepromoting and upholding human rights is primarily the responsibility ofgovernments, where corporate conduct and human rights intersect enterprisesdo play a role, and thus MNEs are encouraged to respect human rights, not onlyin their dealings with employees, but also with respect to others affectedby their activities, in a manner that is consistent with host governments’

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III. COMMENTARIES

international obligations and commitments. The Universal Declaration ofHuman Rights and other human rights obligations of the governmentconcerned are of particular relevance in this regard.

5. The Guidelines also acknowledge and encourage the contribution thatMNEs can make to local capacity building as a result of their activities in localcommunities. Similarly, the recommendation on human capital formation isan explicit and forward-looking recognition of the contribution to individualhuman development that MNEs can offer their employees, and encompassesnot only hiring practices, but training and other employee developmentas well. Human capital formation also incorporates the notion of non-discrimination in hiring practices as well as promotion practices, life-longlearning and other on-the-job training.

6. Governments recommend that, in general, enterprises avoid efforts tosecure exemptions not contemplated in the statutory or regulatory frameworkrelated to environmental, health, safety, labour, taxation and financial incentivesamong other issues, without infringing on an enterprise’s right to seek changes inthe statutory or regulatory framework. The words “or accepting” also drawattention to the role of the state in offering these exemptions. While this sort ofprovision has been traditionally directed at governments, it is also of directrelevance to MNEs. Importantly, however, there are instances where specificexemptions from laws or other policies can be consistent with these laws forlegitimate public policy reasons. The environment and competition policychapters are examples.

7. The paragraph devoted to the role of MNEs in corporate governance givesfurther impetus to the recently adopted OECD Principles of CorporateGovernance. Although primary responsibility for improving the legal andinstitutional regulatory framework lies with governments, enterprises also havean interest in good governance.

8. An increasing network of non-governmental self-regulatory instrumentsand actions address aspects of corporate behaviour and the relationshipsbetween business and society. Enterprises recognise that their activities oftenhave social and environmental implications. The institution of self-regulatorypractices and management systems by enterprises sensitive to reaching thesegoals – thereby contributing to sustainable development – is an illustration ofthis. In turn, developing such practices can further constructive relationshipsbetween enterprises and the societies in which they operate.

9. Following from effective self-regulatory practices, as a matter of course,enterprises are expected to promote employee awareness of companypolicies. Safeguards to protect bona fide “whistle-blowing” activities are alsorecommended, including protection of employees who, in the absence oftimely remedial action or in the face of reasonable risk of negative


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employment action, report practices that contravene the law to the competentpublic authorities. While of particular relevance to anti-bribery andenvironmental initiatives, such protection is also relevant to otherrecommendations in the Guidelines.

10. Encouraging, where practicable, compatible principles of corporateresponsibility among business partners serves to combine a re-affirmation of thestandards and principles embodied in the Guidelines with an acknowledgement oftheir importance to suppliers, contractors, subcontractors, licensees and otherentities with which MNEs enjoy a working relationship. It is recognised that thereare practical limitations to the ability of enterprises to influence the conduct oftheir business partners. The extent of these limitations depends on sectoral,enterprise and product characteristics such as the number of suppliers or otherbusiness partners, the structure and complexity of the supply chain and themarket position of the enterprise vis-à-vis its suppliers or other business partners.The influence enterprises may have on their suppliers or business partners isnormally restricted to the category of products or services they are sourcing,rather than to the full range of activities of suppliers or business partners. Thus,the scope for influencing business partners and the supply chain is greater insome instances than in others. Established or direct business relationships arethe major object of this recommendation rather than all individual or ad hoc

contracts or transactions that are based solely on open market operations orclient relationships. In cases where direct influence of business partners is notpossible, the objective could be met by means of dissemination of general policystatements of the enterprise or membership in business federations thatencourage business partners to apply principles of corporate conduct compatiblewith the Guidelines.

11. Finally, it is important to note that self-regulation and other initiatives ina similar vein, including the Guidelines, should not unlawfully restrictcompetition, nor should they be considered a substitute for effective law andregulation by governments. It is understood that MNEs should avoid potentialtrade or investment distorting effects of codes and self-regulatory practiceswhen they are being developed.

Commentary on Disclosure

12. The purpose of this chapter is to encourage improved understanding ofthe operations of multinational enterprises. Clear and complete informationon enterprises is important to a variety of users ranging from shareholdersand the financial community to other constituencies such as employees, localcommunities, special interest groups, governments and society at large. Toimprove public understanding of enterprises and their interaction withsociety and the environment, enterprises should be transparent in their


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operations and responsive to the public’s increasingly sophisticated demandsfor information. The information highlighted in this chapter may be asupplement to disclosure required under the national laws of the countries inwhich the enterprise operates.

13. This chapter addresses disclosure in two areas. The first set of disclosurerecommendations is identical to disclosure items outlined in the OECD Principlesof Corporate Governance. The Principles call for timely and accurate disclosure onall material matters regarding the corporation, including the financial situation,performance, ownership, and governance of the company. Companies are alsoexpected to disclose sufficient information on the remuneration of boardmembers and key executives (either individually or in the aggregate) forinvestors to properly assess the costs and benefits of remuneration plans andthe contribution of incentive schemes, such as stock option schemes, toperformance. The Principles contain annotations that provide further guidanceon the required disclosures and the recommendations in the Guidelines shouldbe construed in relation to these annotations. They focus on publicly tradedcompanies. To the extent that they are deemed applicable, they should also bea useful tool to improve corporate governance in non-traded enterprises; forexample, privately held and state owned enterprises.

14. The Guidelines also encourage a second set of disclosure or communicationpractices in areas where reporting standards are still emerging such as, forexample, social, environmental, and risk reporting. Many enterprises provideinformation on a broader set of topics than financial performance and considerdisclosure of such information a method by which they can demonstrate acommitment to socially acceptable practices. In some cases, this second type ofdisclosure – or communication with the public and with other parties directlyaffected by the firms’ activities – may pertain to entities that extend beyondthose covered in the enterprises’ financial accounts. For example, it may alsocover information on the activities of subcontractors and suppliers or of jointventure partners.

15. Many enterprises have adopted measures designed to help them complywith the law and standards of business conduct, and to enhance thetransparency of their operations. A growing number of firms have issuedvoluntary codes of corporate conduct, which are expressions of commitmentsto ethical values in such areas as environment, labour standards or consumerprotection. Specialised management systems are being developed with theaim of helping them respect these commitments – these involve informationsystems, operating procedures and training requirements. Enterprises are co-operating with NGOs and intergovernmental organisations in developingreporting standards that enhance enterprises’ ability to communicate howtheir activities influence sustainable development outcomes (e.g. the GlobalReporting Initiative).


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16. The OECD Principles of Corporate Governance support the development of highquality internationally recognised standards of accounting, financial and non-financial disclosure, and audit, which can serve to improve the comparability ofinformation among countries. Financial audits conducted by independentauditors provide external and objective assurance on the way in which financialstatements have been prepared and presented. The transparency andeffectiveness of non-financial disclosure may be enhanced by independentverification. Techniques for independent verification of non-financial disclosureare emerging.

17. Enterprises are encouraged to provide easy and economical access topublished information and to consider making use of informationtechnologies to meet this goal. Information that is made available to users inhome markets should also be available to all interested users. Enterprises maytake special steps to make information available to communities that do nothave access to printed media (e.g. poorer communities that are directlyaffected by the enterprise’s activities).

18. Disclosure requirements are not expected to place unreasonableadministrative or cost burdens on enterprises. Nor are enterprises expected todisclose information that may endanger their competitive position unlessdisclosure is necessary to fully inform the investment decision and to avoidmisleading the investor.

Commentary on Employment and Industrial Relations

19. This chapter opens with a chapeau that includes a reference to“applicable” law and regulations, which is meant to acknowledge the fact thatmultinational enterprises, while operating within the jurisdiction of particularcountries, may be subject to national, sub-national, as well as supra-national levelsof regulation of employment and industrial relations matters. The terms“prevailing labour relations” and “employment practices” are sufficiently broadto permit a variety of interpretations in light of different national circumstances– for example, different bargaining options provided for employees undernational laws and regulations.

20. The International Labour Organisation (ILO) is the competent body to setand deal with international labour standards, and to promote fundamental rightsat work as recognised in its 1998 Declaration on Fundamental Principles andRights at Work. The Guidelines, as a non-binding instrument, have a role to play inpromoting observance of these standards and principles among multinationalenterprises. The provisions of the Guidelines chapter echo relevant provisions ofthe 1998 Declaration, as well as the ILO’s 1977 Tripartite Declaration of Principlesconcerning Multinational Enterprises and Social Policy. The Tripartite Declarationsets out principles in the fields of employment, training, working conditions, and


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industrial relations, while the OECD Guidelines cover all major aspects ofcorporate behaviour. The OECD Guidelines and the ILO Tripartite Declarationrefer to the behaviour expected from enterprises and are intended to parallel andnot conflict with each other. The ILO Tripartite Declaration can therefore be of usein understanding the Guidelines to the extent that it is of a greater degree ofelaboration. However, the responsibilities for the follow-up procedures under theTripartite Declaration and the Guidelines are institutionally separate.

21. The first paragraph of this chapter is designed to echo all four fundamentalprinciples and rights at work which are contained in the ILO’s 1998 Declaration,namely the freedom of association and right to collective bargaining, theeffective abolition of child labour, the elimination of all forms of forced orcompulsory labour, and non-discrimination in employment and occupation.These principles and rights have been developed in the form of specific rightsand obligations in ILO Conventions recognised as fundamental.

22. The chapter recommends that multinational enterprises contribute to theeffective abolition of child labour in the sense of the ILO 1998 Declaration andILO Convention 182 concerning the worst forms of child labour. Long-standingILO instruments on child labour are Convention 138 and Recommendation 146(both adopted in 1973) concerning minimum ages for employment. Throughtheir labour management practices, their creation of high quality, well paid jobsand their contribution to economic growth, multinational enterprises can playa positive role in helping to address the root causes of poverty in general and ofchild labour in particular. It is important to acknowledge and encourage the roleof multinational enterprises in contributing to the search for a lasting solutionto the problem of child labour. In this regard, raising the standards of educationof children living in host countries is especially noteworthy.

23. The chapter also recommends that enterprises contribute to theelimination of all forms of compulsory labour, another principle derived fromthe 1998 ILO Declaration. The reference to this core labour right is based on theILO Conventions 29 of 1930 and 105 of 1957. C. 29 requests that governments“suppress the use of forced or compulsory labour in all its forms within theshortest possible period”, while C. 105 requests of them to “suppress and not tomake use of any form of forced or compulsory labour” for certain enumeratedpurposes (e.g. as a means of political coercion or labour discipline), and “to takeeffective measures to secure [its] immediate and complete abolition”. At thesame time, it is understood that the ILO is the competent body to deal with thedifficult issue of prison labour, in particular when it comes to the hiring-out ofprisoners to (or their placing at the disposal of) private individuals, companiesor associations.

24. The principle of non-discrimination with respect to employment andoccupation is considered to apply to such terms and conditions as hiring,


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discharge, pay, promotion, training and retirement. The list of non-permissiblegrounds for discrimination which is taken from ILO Convention 111 of 1958considers that any distinction, exclusion or preference on these grounds is inviolation of the Convention. At the same time, the text makes clear that theterms do not constitute an exhaustive list. Consistent with the provisions inparagraph 1d), enterprises are expected to promote equal opportunities forwomen and men with special emphasis on equal criteria for selection,remuneration, and promotion, and equal application of those criteria, andprevent discrimination or dismissals on the grounds of marriage, pregnancy orparenthood.

25. The reference to consultative forms of employee participation inparagraph two of the Guidelines is taken from ILO Recommendation 94 of 1952concerning Consultation and Co-operation between Employers and Workersat the Level of the Undertaking. It also conforms to a provision contained inthe 1977 ILO Tripartite Declaration of Principles concerning MultinationalEnterprises and Social Policy. Such consultative arrangements should notsubstitute for employees’ right to bargain over terms and conditions ofemployment. A recommendation on consultative arrangements with respectto employment arrangements is also part of paragraph eight.

26. In paragraph three of this chapter, information provided by companies totheir employees is expected to provide a “true and fair view” of performance.It relates to the following: the structure of the enterprise, its economic andfinancial situation and prospects, employment trends, and expectedsubstantial changes in operations, taking into account legitimaterequirements of business confidentiality. Considerations of businessconfidentiality may mean that information on certain points may not beprovided, or may not be provided without safeguards.

27. In paragraph four, employment and industrial relations standards areunderstood to include compensation and working-time arrangements. Thereference to occupational health and safety implies that MNEs are expected tofollow prevailing regulatory standards and industry norms to minimise therisk of accidents and injury to health arising out of, linked with, or occurringin, the course of employment. This encourages enterprises to work to raise thelevel of performance with respect to occupational health and safety in allparts of their operation even where this may not be formally required byexisting regulations in countries in which they operate. It also encouragesenterprises to respect employees’ ability to remove themselves from a worksituation when there is reasonable justification to believe that it presents animminent and serious risk to health or safety. Reflecting their importance andcomplementarities among related recommendations, health and safetyconcerns are echoed elsewhere in the Guidelines, most notably in chapters onConsumer Interests and the Environment.


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28. The recommendation in paragraph five of the chapter encourages MNEs torecruit an adequate workforce share locally, including managerial personnel,and to provide training to them. Language in this paragraph on training and skilllevels complements the text in paragraph four of the General Policies chapter onencouraging human capital formation. The reference to local personnelcomplements the text encouraging local capacity building in paragraph three ofthe General Policies chapter.

29. Paragraph six recommends that enterprises provide reasonable notice tothe representatives of employees and relevant government authorities, ofchanges in their operations which would have major effects upon the livelihoodof their employees, in particular the closure of an entity involving collectivelayoffs or dismissals. As stated therein, the purpose of this provision is to affordan opportunity for co-operation to mitigate the effects of such changes. This isan important principle that is widely reflected in the industrial relations lawsand practices of adhering countries, although the approaches taken to ensuringan opportunity for meaningful co-operation are not identical in all adheringcountries. The paragraph also notes that it would be appropriate if, in light ofspecific circumstances, management were able to give such notice prior to thefinal decision. Indeed, notice prior to the final decision is a feature of industrialrelations laws and practices in a number of adhering countries. However, it isnot the only means to ensure an opportunity for meaningful co-operation tomitigate the effects of such decisions, and the laws and practices of otheradhering countries provide for other means such as defined periods duringwhich consultations must be undertaken before decisions may beimplemented.

Commentary on the Environment

30. The text of the Environment Chapter broadly reflects the principles andobjectives contained in the Rio Declaration on Environment and Development,in Agenda 21 (within the Rio Declaration). It also takes into account the (Aarhus)Convention on Access to Information, Public Participation in Decision-making,and Access to Justice in Environmental Matters and reflects standards containedin such instruments as the ISO Standard on Environmental ManagementSystems.

31. Sound environmental management is an important part of sustainabledevelopment, and is increasingly being seen as both a business responsibilityand a business opportunity. Multinational enterprises have a role to play in bothrespects. Managers of these enterprises should therefore give appropriateattention to environmental issues within their business strategies. Improvingenvironmental performance requires a commitment to a systematic approachand to continual improvement of the system. An environmental management


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system provides the internal framework necessary to control an enterprise’senvironmental impacts and to integrate environmental considerations intobusiness operations. Having such a system in place should help to assurestockholders, employees and the community that the enterprise is activelyworking to protect the environment from the impacts of its activities.

32. In addition to improving environmental performance, instituting anenvironmental management system can provide economic benefits tocompanies through reduced operating and insurance costs, improved energyand resource conservation, reduced compliance and liability charges,improved access to capital, improved customer satisfaction, and improvedcommunity and public relations.

33. In the context of these Guidelines, “sound environmental management”should be interpreted in its broadest sense, embodying activities aimed atcontrolling both direct and indirect environmental impacts of enterpriseactivities over the long-term, and involving both pollution control andresource management elements.

34. In most enterprises, an internal control system is needed to manage theenterprise’s activities. The environmental part of this system may includesuch elements as targets for improved performance and regular monitoring ofprogress towards these targets.

35. Information about the activities of enterprises and associatedenvironmental impacts is an important vehicle for building confidence withthe public. This vehicle is most effective when information is provided in atransparent manner and when it encourages active consultation withstakeholders such as employees, customers, suppliers, contractors, localcommunities and with the public-at-large so as to promote a climate of long-term trust and understanding on environmental issues of mutual interest.

36. Normal business activity can involve the ex ante assessment of thepotential environmental impacts associated with the enterprise’s activities.Enterprises often carry out appropriate environmental impact assessments,even if they are not required by law. Environmental assessments made by theenterprise may contain a broad and forward-looking view of the potentialimpacts of an enterprise’s activities, addressing relevant impacts andexamining alternatives and mitigation measures to avoid or redress adverseimpacts. The Guidelines also recognise that multinational enterprises havecertain responsibilities in other parts of the product life cycle.

37. Several instruments already adopted by countries adhering to the Guidelines,including Principle 15 of the Rio Declaration on Environment and Development,enunciate a “precautionary approach”. None of these instruments is explicitlyaddressed to enterprises, although enterprise contributions are implicit in all ofthem.


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38. The basic premise of the Guidelines is that enterprises should act as soon aspossible, and in a proactive way, to avoid, for instance, serious or irreversibleenvironmental damages resulting from their activities. However, the fact thatthe Guidelines are addressed to enterprises means that no existing instrument iscompletely adequate for expressing this recommendation. The Guidelines

therefore draw upon, but do not completely mirror, any existing instrument.

39. The Guidelines are not intended to reinterpret any existing instruments orto create new commitments or precedents on the part of governments – theyare intended only to recommend how the precautionary approach should beimplemented at the level of enterprises. Given the early stage of this process, itis recognised that some flexibility is needed in its application, based on thespecific context in which it is carried out. It is also recognised that governmentsdetermine the basic framework in this field, and have the responsibility toperiodically consult with stakeholders on the most appropriate ways forward.

40. The Guidelines also encourage enterprises to work to raise the level ofenvironmental performance in all parts of their operations, even where thismay not be formally required by existing practice in the countries in whichthey operate.

41. For example, multinational enterprises often have access to technologiesor operating procedures which could, if applied, help raise environmentalperformance overall. Multinational enterprises are frequently regarded asleaders in their respective fields, so the potential for a “demonstration effect” onother enterprises should not be overlooked. Ensuring that the environment ofthe countries in which multinational enterprises operate also benefits fromavailable technologies is an important way of building support for internationalinvestment activities more generally.

42. Enterprises have an important role to play in the training and educationof their employees with regard to environmental matters. They areencouraged to discharge this responsibility in as broad a manner as possible,especially in areas directly related to human health and safety.

Commentary on Combating Bribery

43. Bribery and corruption are not only damaging to democratic institutionsand the governance of corporations, but they also impede efforts to reducepoverty. In particular, the diversion of funds through corrupt practicesundermines attempts by citizens to achieve higher levels of economic, socialand environmental welfare. Enterprises have an important role to play incombating these practices.

44. Progress in improving the policy framework and in heighteningenterprises’ awareness of bribery as a management issue has been significant.The OECD Convention of Combating Bribery of Foreign Public Officials (the Convention)


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has been signed by 34 countries and entered into force on 15 February 1999. TheConvention, along with the 1997 revised Recommendation on Combating Bribery in

International Business Transactions and the 1996 Recommendation on the TaxDeductibility of Bribes to Foreign Public Officials, are the core instruments throughwhich members of the anti bribery group co-operate to stop the flow of bribesfor the purpose of obtaining or retaining international business. The threeinstruments target the offering side of the bribery transaction. They aim toeliminate the “supply” of bribes to foreign public officials, with each countrytaking responsibility for the activities of its companies and what happens on itsown territory.2 A monitoring programme has been established to assureeffective and consistent implementation and enforcement of the Convention.

45. To address the demand side of bribery, good governance practices areimportant elements to prevent companies from being asked to pay bribes. Inaddition, governments should assist companies confronted with solicitationof bribes.

46. Another important development has been the International Chamber ofCommerce’s recent update of its Report onExtortion and Bribery in Business

Transactions. The Report contains recommendations to governments andinternational organisations on combating extortion and bribery as well as acode of conduct for enterprises that focuses on these issues.

47. Transparency in both the public and private domains is a key concept inthe fight against bribery and extortion. The business community, non-governmental organisations and governments and inter-governmentalorganisations have all co-operated to strengthen public support for anti-corruption measures and to enhance transparency and public awareness ofthe problems of corruption and bribery. The adoption of appropriate corporategovernance practices is a complementary element in fostering a culture ofethics within the enterprise.

Commentary on Consumer Interests

48. A brief reference to “consumer interests” was first introduced into theGuidelines in 1984, to reflect increasingly international aspects of consumerpolicies and the impact that the expansion of international trade, productpackaging, marketing and sales and product safety can have on those policies.Since that time, the development of electronic commerce and the increasedglobalisation of the marketplace have substantially increased the reach ofMNEs and consumer access to their goods and services. In recognition of theincreasing importance of consumer issues, a substantial percentage ofenterprises, in their management systems and codes of conduct includereferences to consumer interests and protections.


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49. In light of these changes, and with an eye to helping enhance consumersafety and health, a chapter on consumer interests has been added to theGuidelines as a result of the current Review. Language in this chapter draws onthe work of the OECD Committee on Consumer Policy, as well as thatembodied in various individual and international corporate codes (such asthose of the ICC), the UN Guidelines on Consumer Policy, and the OECDGuidelines for Consumer Protection in the Context of Electronic Commerce.

50. A variety of consumer protection laws exist that govern business practices.The emerging framework is intended to both protect consumer interests andfoster economic growth and places a growing emphasis on the use of self-regulatory mechanisms. As noted, many existing national and internationalcorporate codes of conduct include a reference to some aspect of consumerprotection and amplify the commitment of industry to help protect health andsafety and build consumer confidence in the marketplace. Ensuring that thesesorts of practices provide consumers with effective and transparent protectionis essential to help build trust that encourages consumer participation andmarket growth.

51. The emphasis on alternative dispute resolution in paragraph 3 of thechapter is an attempt to focus on what may in many cases be a more practicablesolution to complaints than legal action which can be expensive, difficult andtime consuming for everyone involved. It is particularly important thatcomplaints relating to the consumption or use of a particular product thatresults in serious risks or damages to public health should be resolved in a fairand timely manner without undue cost or burden to the consumer.

52. Regarding paragraph 5, enterprises could look to the OECD GuidelinesGoverning the Protection of Privacy and Transborder Flows of Personal Data asa helpful basis for protecting personal data.

Commentary on Science and Technology

53. In a knowledge-based and globalised economy where national bordersmatter less, even for small or domestically oriented enterprises, the ability toaccess and utilise technology and know-how is essential for improving firmperformance. Such access is also important for the realisation of theeconomy-wide effects of technological progress, including productivitygrowth and job creation, within the context of sustainable development.Multinational enterprises are the main conduit of technology transfer acrossborders. They contribute to the national innovative capacity of their hostcountries by generating, diffusing, and even enabling the use of newtechnologies by domestic enterprises and institutions. The R&D activities ofMNEs, when well connected to the national innovation system, can help


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enhance the economic and social progress in their host countries. In turn, thedevelopment of a dynamic innovation system in the host country expandscommercial opportunities for MNEs.

54. The chapter thus aims to promote, within the limits of economic feasibility,competitiveness concerns and other considerations, the diffusion bymultinational enterprises of the fruits of research and development activitiesamong the countries where they operate, contributing thereby to the innovativecapacities of host countries. In this regard, fostering technology diffusion caninclude the commercialisation of products which imbed new technologies,licensing of process innovations, hiring and training of S&T personneland development of R&D co-operative ventures. When selling or licensingtechnologies, not only should the terms and conditions negotiated be reasonable,but MNEs may want to consider the long-term developmental, environmentaland other impacts of technologies for the home and host country. In theiractivities, multinational enterprises can establish and improve the innovativecapacity of their international subsidiaries and subcontractors. In addition, MNEscan call attention to the importance of local scientific and technologicalinfrastructure, both physical and institutional. In this regard, MNEs can usefullycontribute to the formulation by host country governments of policy frameworksconducive to the development of dynamic innovation systems.

Commentary on Competition

55. These Guidelines are intended to emphasise the importance of competitionlaws and policies to the efficient operation of both domestic and internationalmarkets, to reaffirm the importance of compliance with those laws and policiesby domestic and multinational enterprises, and to ensure that all enterprisesare aware of developments concerning the number, scope, and severity ofcompetition laws and in the extent of co-operation among competitionauthorities. The term “competition” law is used to refer to laws, including both“antitrust” and “antimonopoly” laws, that prohibit collective or unilateral actionto: a) abuse market power or dominance; b) acquire market power or dominanceby means other than efficient performance; or c) engage in anti-competitiveagreements.

56. In general, competition laws and policies prohibit: a) hard core cartels;b) other agreements that are deemed to be anti-competitive; c) conduct thatexploits or extends market dominance or market power; and d) anti-competitivemergers and acquisitions. Under the 1998 Recommendation of the OECD CouncilConcerning Effective Action Against Hard Core Cartels, C(98)35/Final, the anti-competitive agreements referred to in sub a) constitute hard core cartels, but theRecommendation incorporates differences in member countries’ laws, includingdifferences in the laws’ exemptions or provisions allowing for an exception or


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authorisation for activity that might otherwise be prohibited. These guidelinesshould not be interpreted as suggesting that enterprises should not availthemselves of such exemptions or provisions. The categories sub b) and c) aremore general because the effects of other kinds of agreements and of unilateralconduct are more ambiguous, and there is less consensus on what should beconsidered anti-competitive.

57. The goal of competition policy is to contribute to overall social welfare andeconomic growth by creating and maintaining market conditions in which thenature, quality, and price of goods and services are determined by market forcesexcept to the extent a jurisdiction considers necessary to achieve other goals. Inaddition to benefiting consumers and a jurisdiction’s economy as a whole, sucha competitive environment rewards enterprises that respond efficiently toconsumer demand, and enterprises should provide information and advicewhen governments are considering laws and policies that might reduce theirefficiency or otherwise affect the competitiveness of markets.

58. Enterprises should be aware that competition laws are being enacted in arapidly increasing number of jurisdictions, and that it is increasingly commonfor those laws to prohibit anti-competitive activities that occur abroad if theyhave a harmful impact on domestic consumers. Moreover, the growth ofcross-border trade and investment makes it more likely that anti-competitiveconduct taking place in one jurisdiction will have harmful effects in otherjurisdictions. As a result, anti-competitive unilateral or concerted conductthat is or may be legal where it occurs is increasingly likely to be illegal inanother jurisdiction. Enterprises should therefore take into account both thelaw of the country in which they are operating and the laws of all countries inwhich the effects of their conduct are likely to be felt.

59. Finally, enterprises should understand that competition authorities areengaging in more and deeper co-operation in investigating and challenginganti-competitive activity. See generally: Recommendation of the CouncilConcerning Co-operation between Member Countries on AnticompetitivePractices Affecting International Trade, C(95)130/Final; Making InternationalMarkets More Efficient Through "Positive Comity" in Competition Law Enforcement,Report of the OECD Committee on Competition Law and Policy, DAFFE/CLP(99)19.When the competition authorities of various jurisdictions are reviewing the sameconduct, enterprises’ facilitation of co-operation among the authorities promotesconsistent and sound decision-making while also permitting cost savings forgovernments and enterprises.


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Commentary on Taxation

60. Corporate citizenship in the area of taxation implies that enterprisesshould comply with the taxation laws and regulations in all countries inwhich they operate, co-operate with authorities and make certain kinds ofinformation available to them. However, this commitment to provideinformation is not without limitation. In particular, the Guidelines make a linkbetween the information that should be provided and its relevance to theenforcement of applicable tax laws. This recognises the need to balance theburden on business in complying with applicable tax laws and the need for taxauthorities to have the complete, timely and accurate information to enablethem to enforce their tax laws.

61. A member of an MNE group in one country may have extensive economicrelationships with members of the same MNE group in other countries. Suchrelationships may affect the tax liability of each of the parties. Accordingly, taxauthorities may need information from outside their jurisdiction in order to beable to evaluate those relationships and determine the tax liability of themember of the MNE group in their jurisdiction. Again, the information to beprovided is limited to that which is relevant to the proposed evaluation ofthose economic relationships for the purpose of determining the correct taxliability of the member of the MNE group. MNEs should co-operate inproviding that information.

62. Transfer pricing is another important issue for corporate citizenship andtaxation. The dramatic increase in global trade and cross-border directinvestment (and the important role played in such trade and investment byMNEs) has meant that transfer pricing tends now to be a significantdeterminant of the tax liabilities of members of an MNE group. It is recognisedthat determining whether transfer pricing respects the arm’s length standard(or principle) is often difficult both for MNEs and for tax administrations.

63. The Committee on Fiscal Affairs (CFA) of the OECD undertakes ongoingwork to develop recommendations for ensuring transfer pricing reflects thearm’s length principle. Its work resulted in the publication in 1995 of theOECD Transfer Pricing Guidelines for Multinational Enterprises and TaxAdministrations (OECD Transfer Pricing Guidelines) which was the subject ofthe Recommendation of the OECD Council on the Determination of TransferPricing between Associated Enterprises (members of an MNE group wouldnormally fall within the definition of Associated Enterprises).

64. The OECD Transfer Pricing Guidelines focus on the application of the arm’slength principle to evaluate the transfer pricing of associated enterprises. TheTransfer Pricing Guidelines aim to help tax administrations (of both OECDmember countries and non-member countries) and MNEs by indicatingmutually satisfactory solutions to transfer pricing cases, thereby minimising


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conflict among tax administrations and between tax administrations and MNEsand avoiding costly litigation. MNEs are encouraged to follow the guidance inthe OECD Transfer Pricing Guidelines, as amended and supplemented, in orderto ensure that their transfer prices reflect the arm’s length principle.

Notes

1. One of the most broadly accepted definitions of sustainable development is inthe 1987 World Commission on Environment and Development (the BrundtlandCommission): “Development that meets the needs of the present withoutcompromising the ability of future generations to meet their own needs.”

2. For the purposes of the Convention, a “bribe” is defined as an “… offer, promise, orgiv(ing) of any undue pecuniary or other advantage, whether directly or throughintermediaries, to a foreign public official, for that official or for a third party, inorder that the official act or refrain from acting in relation to the performance ofofficial duties, in order to obtain or retain business or other improper advantage inthe conduct of international business”. The Commentaries to the Convention(paragraph 9) clarify that “(s)mall ’facilitation’ payments do not constitute paymentsmade ’to obtain or retain business or other improper advantage’ within themeaning of paragraph 1 and, accordingly, are also not an offence. Such payments,which, in some countries, are made to induce public officials to perform theirfunctions, such as issuing licenses or permits, are generally illegal in the foreigncountry concerned. Other countries can and should address this corrosivephenomenon by such means as support for programmes of good governance…”.



© OECD 2008

Commentary on the Implementation Procedures of the OECD Guidelines

for Multinational Enterprises

1. The Council Decision represents the commitment of adhering countriesto further the implementation of the recommendations contained in the textof the Guidelines. Procedural guidance for both NCPs and the InvestmentCommittee is attached to the Council Decision.

2. The Council Decision sets out key adhering country responsibilities forthe Guidelines with respect to NCPs, summarised as follows:

● Setting up NCPs (which will take due account of the procedural guidanceattached to the Decision), and informing interested parties of the availabilityof Guidelines-related facilities.

● NCPs in different countries to co-operate with each other as necessary.

● NCPs to meet annually and report to the Committee.

3. The Council Decision also establishes CIME’s responsibilities for theGuidelines, including:

● Organising exchanges of views on matters relating to the Guidelines.

● Issuing clarifications as necessary.

● Holding exchanges of views on the activities of NCPs.

● Reporting to the OECD Council on the Guidelines.

4. The Investment Committee is the OECD body responsible for overseeingthe functioning of the Guidelines. This responsibility applies not only to theGuidelines, but to all elements of the Declaration (National TreatmentInstrument, and the instruments on International Investment Incentives andDisincentives, and Conflicting Requirements). In the Declaration, Committeeseeks to ensure that each element is respected and understood, and that theyall complement and operate in harmony with each other.

5. Reflecting the increasing relevance of the Guidelines to countries outsidethe OECD, the Decision provides for consultations with non-adhering countrieson matters covered by the Guidelines. This provision allows the Committee toarrange periodic meetings with groups of countries interested in Guidelines

issues, or to arrange contacts with individual countries if the need arises. These

55

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meetings and contacts could deal with experiences in the overall functioning ofthe Guidelines or with specific issues. Further guidance concerning theCommittee and NCP interaction with non-adhering countries is provided in theProcedural Guidance attached to the Decision.

I. Procedural Guidance for NCPs

6. National Contact Points have an important role in enhancing the profileand effectiveness of the Guidelines. While it is enterprises that are responsiblefor observing the Guidelines in their day-to-day behaviour, governments cancontribute to improving the effectiveness of the implementation procedures.To this end, they have agreed that better guidance for the conduct andactivities of NCPs is warranted, including through annual meetings andCommittee oversight.

7. Many of the functions in the Procedural Guidance of the Decision are notnew, but reflect experience and recommendations developed over the years(e.g. the 1984 Review Report C/MIN(84)5(Final)). By making them explicit theexpected functioning of the implementation mechanisms of the Guidelines ismade more transparent. All functions are now outlined in four parts of theProcedural Guidance pertaining to NCPs: institutional arrangements,information and promotion, implementation in specific instances, andreporting.

8. These four parts are preceded by an introductory paragraph that sets outthe basic purpose of NCPs, together with core criteria to promote the conceptof “functional equivalence”. Since governments are accorded flexibility in theway they organise NCPs, NCPs should function in a visible, accessible,transparent, and accountable manner. These criteria will guide NCPs incarrying out their activities and will also assist the Committee in discussingthe conduct of NCPs.

Core Criteria for Functional Equivalence in the Activities of NCPs

Visibility. In conformity with the Decision, adhering governments agree tonominate National Contact Points, and also to inform the businesscommunity, employee organisations and other interested parties, includingNGOs, about the availability of facilities associated with NCPs in theimplementation of the Guidelines. Governments are expected to publishinformation about their contact points and to take an active role in promotingthe Guidelines, which could include hosting seminars and meetings on theinstrument. These events could be arranged in co-operation with business,labour, NGOs, and other interested parties, though not necessarily with allgroups on each occasion.


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Accessibility. Easy access to NCPs is important to their effective functioning.This includes facilitating access by business, labour, NGOs, and other membersof the public. Electronic communications can also assist in this regard. NCPswould respond to all legitimate requests for information, and also undertake todeal with specific issues raised by parties concerned in an efficient and timelymanner.

Transparency. Transparency is an important criterion with respect to itscontribution to the accountability of the NCP and in gaining the confidence ofthe general public. Thus most of the activities of the NCP will be transparent.Nonetheless when the NCP offers its “good offices” in implementing theGuidelines in specific instances, it will be in the interests of their effectivenessto take appropriate steps to establish confidentiality of the proceedings.Outcomes will be transparent unless preserving confidentiality is in the bestinterests of effective implementation of the Guidelines.

Accountability. A more active role with respect to enhancing the profile ofthe Guidelines – and their potential to aid in the management of difficult issuesbetween enterprises and the societies in which they operate – will also put theactivities of NCPs in the public eye. Nationally, parliaments could have a roleto play. Annual reports and annual meetings of NCPs will provide anopportunity to share experiences and encourage “best practices” with respectto NCPs. The Committee will also hold exchanges of views, where experienceswould be exchanged and the effectiveness of the activities of NCPs could beassessed.

Institutional Arrangements

9. The composition of NCPs should be such that they provide an effectivebasis for dealing with the broad range of issues covered by the Guidelines.Different forms of organisation (e.g. representatives from one Ministry, aninteragency group, or one that contained representatives from non-governmental bodies) are possible. It may be helpful for the NCP to be headed bya senior official. NCP leadership should be such that it retains the confidence ofsocial partners and fosters the public profile of the Guidelines. NCPs, whatevertheir composition, are expected to develop and maintain relations withrepresentatives of the business community, employee organisations, and otherinterested parties.

Information and Promotion

10. The NCP functions associated with information and promotion arefundamentally important to enhancing the profile of the Guidelines. Thesefunctions also help to put an accent on “pro-active” responsibilities of NCPs.


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11. NCPs are required to make the Guidelines better known and available byappropriate means, including in national languages. On-line information maybe a cost-effective means of doing this, although it should be noted thatuniversal access to this means of information delivery cannot be assured.English and French language versions will be available from the OECD, andwebsite links to the OECD Guidelines website are encouraged. As appropriate,NCPs will also provide prospective investors, both inward and outward, withinformation about the Guidelines. A separate provision also stipulates that intheir efforts to raise awareness of the Guidelines, NCPs will co-operate with awide variety of organisations and individuals, including, as appropriate, thebusiness community, employee organisations, other non-governmentalorganisations, and the interested public.

12. Another basic activity expected of NCPs is responding to legitimateenquiries. Three groups have been singled out for attention in this regard:i) other National Contact Points (reflecting a provision in the Decision); ii) thebusiness community, employee organisations, other non-governmentalorganisations and the public; and iii) governments of non-adhering countries.

Implementation in Specific Instances

13. When issues arise relating to implementation of the Guidelines in specificinstances, the NCP is expected to help resolve them. Generally, issues will bedealt with by the NCP in whose country the issue has arisen. Among adheringcountries, such issues will first be discussed on the national level and, whereappropriate, pursued at the bilateral level. This section of the ProceduralGuidance provides guidance to NCPs on how to handle such situations. TheNCP may also take other steps to further the effective implementation of theGuidelines.

14. In making an initial assessment of whether the issue raised meritsfurther examination, the NCP will need to determine whether the issue is bona

fide and relevant to the implementation of the Guidelines. In this context, theNCP will take into account:

● the identity of the party concerned and its interest in the matter;

● whether the issue is material and substantiated;

● the relevance of applicable law and procedures;

● how similar issues have been, or are being, treated in other domestic orinternational proceedings;

● whether the consideration of the specific issue would contribute to thepurposes and effectiveness of the Guidelines.


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15. Following its initial assessment, the NCP is expected to respond to theparty or parties having raised the issue. If the NCP decides that the issue doesnot merit further consideration, it will give reasons for its decision.

16. Where the issues raised merit further consideration, the NCP woulddiscuss the issue further with parties involved and offer “good offices” in aneffort to contribute informally to the resolution of issues. Where relevant, NCPswill follow the procedures set out in paragraph 2a) through 2d). This couldinclude seeking the advice of relevant authorities, as well as representatives ofthe business community, labour organisations, other non-governmentalorganisations, and experts. Consultations with NCPs in other countries, orseeking guidance on issues related to the interpretation of the Guidelines mayalso help to resolve the issue.

17. As part of making available good offices, and where relevant to the issuesat hand, NCPs will offer, or facilitate access to, consensual and non-adversarial procedures, such as conciliation or mediation, to assist in dealingwith the issues at hand, such as conciliation or mediation. In common withaccepted practices on conciliation and mediation procedures, theseprocedures would be used only upon agreement of the parties concerned.

18. If the parties involved fail to reach agreement on the issues raised, theNCP will issue a statement, and make recommendations as appropriate, onthe implementation of the Guidelines. This procedure makes it clear that anNCP will issue a statement, even when it feels that a specific recommendationis not called for.

19. Transparency is recognised as a general principle for the conduct of NCPsin their dealings with the public (see para. 8 in “Core Criteria” section, above).However, paragraph C-4 recognises that there are specific circumstanceswhere confidentiality is important. The NCP will take appropriate steps toprotect sensitive business information. Equally, other information, such as theidentity of individuals involved in the procedures, should be kept confidentialin the interests of the effective implementation of the Guidelines. It isunderstood that proceedings include the facts and arguments broughtforward by the parties. Nonetheless, it remains important to strike a balancebetween transparency and confidentiality in order to build confidence in theGuidelines procedures and to promote their effective implementation. Thus,while para. C-4 broadly outlines that the proceedings associated withimplementation will normally be confidential, the results will normally betransparent.


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20. As noted in para. 2 of the “Concepts and Principles” chapter, enterprisesare encouraged to observe the Guidelines wherever they operate, taking intoaccount the particular circumstances of each host country.

● In the event Guidelines-related issues arise in a non-adhering country, NCPswill take steps to develop an understanding of the issues involved. While itmay not always be practicable to obtain access to all pertinent information,or to bring all the parties involved together, the NCP may still be in aposition to pursue enquiries and engage in other fact finding activities.Examples of such steps could include contacting the management of thefirm in the home country, and, as appropriate, government officials in thenon-adhering country.

● Conflicts with host country laws, regulations, rules and policies may makeeffective implementation of the Guidelines in specific instances moredifficult than in adhering countries. As noted in the commentary to theGeneral Policies chapter, while the Guidelines extend beyond the law inmany cases, they should not and are not intended to place an enterprise ina situation where it faces conflicting requirements.

● The parties involved will have to be advised of the limitations inherent inimplementing the Guidelines in non-adhering countries.

● Issues relating to the Guidelines in non-adhering countries could also bediscussed at NCP annual meetings with a view to building expertise inhandling issues arising in non-adhering countries.

Reporting

21. Reporting would be an important responsibility of NCPs that would alsohelp to build up a knowledge base and core competencies in furthering theeffectiveness of the Guidelines. In reporting on implementation activities inspecific instances, NCPs will comply with transparency and confidentialityconsiderations as set out in para. C-4.

Procedural Guidance for the Investment Committee

22. The Procedural Guidance to the Council Decision provides additionalguidance to the Committee in carrying out its responsibilities, including:

● Discharging its responsibilities in an efficient and timely manner.

● Considering requests from NCPs for assistance.

● Holding exchanges of views on the activities of NCPs.

● Providing for the possibility of seeking advice from experts.

23. The non-binding nature of the Guidelines precludes the Committee fromacting as a judicial or quasi-judicial body. Nor should the findings andstatements made by the NCP (other than interpretations of the Guidelines) be


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questioned by a referral to the Committee. The provision that the Committeeshall not reach conclusions on the conduct of individual enterprises has beenmaintained in the Decision itself.

24. The Committee will consider requests from NCPs for assistance,including in the event of doubt about the interpretation of the Guidelines inparticular circumstances. This paragraph reflects paragraph C-2c) of theProcedural Guidance to the Council Decision pertaining to NCPs, where NCPsare invited to seek the guidance of the Committee if they have doubt about theinterpretation of the Guidelines in these circumstances.

25. When discussing NCP activities, it is not intended that the Committeeconduct annual reviews of each individual NCP, although the Committee willmake recommendations, as necessary, to improve their functioning, includingwith respect to the effective implementation of the Guidelines.

26. A substantiated submission by an adhering country or an advisory bodythat an NCP was not fulfilling its procedural responsibilities in theimplementation of the Guidelines in specific instances will also be consideredby the Committee. This complements provisions in the section of theProcedural Guidance pertaining to NCPs reporting on their activities.

27. Clarifications of the meaning of the Guidelines at the multilateral levelwould remain a key responsibility of the Committee to ensure that themeaning of the Guidelines would not vary from country to country. Asubstantiated submission by an adhering country or advisory body withrespect to whether an NCP interpretation of the Guidelines is consistent withCommittee interpretations will also be considered. This may not be neededvery often, but would provide a vehicle to ensure consistent interpretation ofthe Guidelines.

28. Finally, the Committee may wish to call on experts to address and reporton broader issues (e.g. child labour, human rights) or individual issues, or toimprove the effectiveness of procedures. For this purpose, the Committeecould call on OECD in-house expertise, international organisations, theadvisory bodies, NGOs, academics and others. It is understood that this willnot become a panel to settle individual issues.


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OECD Guidelines for Multinational Enterprises The OECD Guidelines for Multinational Enterprises are the most comprehensive instrument in existence today for corporate responsibility multilaterally agreed by governments. Adhering governments - representing all regions of the world and accounting for 85 per cent of foreign direct investment – are committed to encouraging enterprises operating in their territory to observe a set of widely recognised principles and standards for responsible business conduct wherever they operate. This booklet contains the text, implementation procedures and commentary adopted in June 2000, on the occasion of the most recent revision of the Guidelines.

Detailed information about adhering governments and actions taken to implement the Guidelines is available on the OECD website at www.oecd.org/daf/investment/guidelines

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OECD Guidelines for Multinational Enterprises · OECD Guidelines for Multinational Enterprises The OECD Guidelines for Multinational Enterprises are the most comprehensive instrument